DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears
Brenda was joined by: Nick Warnock, from “The Apprentice”; John “Bradshaw” Layfield, WWE Superstar & author of Have More Money Now; Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Rob Stein, managing partner of Astor Asset Management.
Trading Pit: Stocks Win, Homes Lose?
If home prices fall, will stock prices soar?
Bradshaw: Money will go into stocks if home prices fall. Money always goes where it is rewarded. If interest rates rise, homes are more expensive to buy, bonds (search) are going to tank, and money will go into stocks. Rising rates is good for stocks because it shows strength in the economy.
Tobin: If the housing market really dropped, interest rates would have to skyrocket, which would not be good for stocks. So stocks will not soar if home prices crash.
Rob: Homes that were bought as investments will suffer when rates go up. But personal income levels are going up after being flat for the last few years, so even with a decline in homes prices, stocks should perform well. The stock market can perform well with higher interest rates, real estate cannot.
Pat: A dramatic fall in home prices will make the majority of people feel less wealthy. This means people will be more likely to hold onto their cash instead of putting it into stocks.
Gary B: If home prices fall, stocks will suffer. But home prices are not going to fall because interest rates won’t come up that much. The market shrugged off any interest rate concerns (which he demonstrated on an S&P 500 chart) and things are starting to perk up. In fact, we should test the highs for the year.
Scott: Agree with Pat that if home prices go down, people will invest less money. Also, if rates rise, there will be a mad rush to buy houses before the next rate rise.
Toby, Scott, Rob, Pat and Bradshaw each picked a stock that is a better investment than real estate.
Rob was up first and chose the Rydex Juno Investor Fund (RYJUX), which he owns. As interest rates rise, this fund goes up, so he thinks this is an excellent way to profit when rates rise. (Rydex Juno Fund closed on Friday at $21.09.) Pat said this fund is a good one to own in the short-term, but for the long-term, its expense ratio is too high.
Bradshaw picked Hewlett-Packard (HPQ) because it is beating Dell (DELL) across the board. He thinks the stock is going to the high $20s by the end of the year. (Hewlett-Packard closed on Friday at $21.67.) Toby doesn’t think investors should buy the stock because it is losing market share and Dell is beginning to invade the printing business. Scott likes the company but said the stock is not going anywhere.
Toby chose Provident Energy Trust (PVX) because it pays a 13 percent dividend, of which 85 percent is tax-free! Also he thinks it will increase its dividend. (Provident Energy Trust closed on Friday at $8.42.) Bradshaw said the problem with this stock is the heavy tax burden from the Canadian government. Rob added that if interest rates go up, the stock will not going do very well.
Pat chose Microsoft (MSFT), which had a great earnings report last Friday. He said right now investors have a great chance to buy a great company at a great price. (Microsoft closed on Friday at $27.54.) Scott said its revenues are not going to be great going forward and the stock is going nowhere.
Scott picked Circuit City (CC). He said it is not a great company, but its stock is going to have a big upside. The company has no debt and he thinks it is worth $18-20. (Circuit City closed on Friday at $12.24.) Rob said this is a very competitive field and its main competitor, Best Buy (BBY), is a better stock.
Nick Warnock may have lost out on a job when Donald Trump fired him on “The Apprentice,” but now he’s starting to make all kinds of money. Nick owns some stocks, and wanted Gary B’s advice.
First, Nick owns Xerox (XRX), which he bought at $9. He said it is a great company with great products. (Xerox closed on Friday at $13.18.) Gary B. agreed that Xerox is a great company and the stock had a nice run, but it started to weaken and fell sharply on Friday. Gary B. said, “Fire this stock now!”
Next, Nick asked about Krispy Kreme (KKD). He said that as a salesman, he brought Krispy Kreme doughnuts to his customers to close deals. He loves the doughnuts and believes strongly in the product. Gary B. said Nick’s thinking is great. His chart showed that it has been going up steadily, and pulled back a little in the last few months. He thinks it is still in good shape and suggested that Nick should buy more when it hits $30. (Krispy Kreme closed on Friday at $35.01.)
Then it was Gary’s turn to pick some stocks for Nick. He said Nick should “hire” General Motors (GM). The stock had nothing going for it until last week, but now it appears to have its mojo back. He thinks it can hit the high $50s. (General Motors closed on Friday at $49.18.) Nick thought it was a great pick.
Gary B’s other stock for Nick was Tenet Healthcare (THC). He said it is similar to GM because it suddenly started heading up when it looked like it was heading down. He said now is the time to buy because it is showing strength and should make great gains from here. (Tenet Healthcare closed on Friday at $11.40.) Nick liked this pick and thanked Gary B. for his advice.
(CORRECTION: The text on Gary's chart predicted Tenet Healthcare would make a 25-30 percent gain. However, he said the stock would move up 40-50 percent. He meant the stock would make a 25-30 percent gain from Friday's close, which would be about a 40-50 percent gain from the lows it hit in March.)
Scott's prediction: Fallujah assault turning point; Iraq gets better, spurs rally!
Tobin's prediction: Rates go up in August; market loves it & Dow hits 11,500 by year end
Gary B's prediction: TASER (TASR) gets zapped! Stock cut in half by October
Bradshaw's prediction: Southwest Air (LUV) defies gravity; makes money while other airlines fold
Rob's prediction: Golden opportunity to buy Goldman Sachs (GS); up 20 percent in one year
(Rob owns a position in Goldman Sachs.)
Pat's prediction: Medtronic (MDT) is shockingly cheap; up 20 percent in 1 year
Cavuto on Business
Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, author of "Adventure Capitalist"; Ben Stein, author of "How to Ruin Your Financial Life"; Cheri Jacobus, Republican Strategist; John Gibson, "Big Story" host and author of "Hating America: The New World Sport"; Joe Piscopo, CEO of Avellino Productions; Charles Payne, CEO of Wall Street Strategies; and Alexander Pires, Civil Rights Lawyer.
Neil Cavuto: Bashing America because we're good at making money! Is envy over our economy the real reason some of our so-called allies are acting more like enemies?
John Gibson: Yes! You hear it in the European press all the time that they envy the American economy because of it's tremendous reach and resilience. We're the one economy in the world that can take these tremendous blows and come back quickly. As much as they complain about America being the pig of global resources, a woman who puts $40 of gas in her SUV tank and goes to the mall and buys German and French stuff, keep our global economy going. That tends to make our overseas friends resentful of us even while they're enjoying the bounty of what we buy.
Jim Rogers: Their economy is bigger than ours and their stock market is better than ours. Their currency is better than ours. Their bond market is better than ours. I hear our government saying to the French that they need to spend more money. They don't want to go into debt. I don't want us to go into debt, but we're printing money and we're going into debt.
Gregg Hymowitz: I hate to pull a Ben Stein here, but so what? I don't understand the import of the Europeans being resentful of our economy. So what?
John Gibson: Because they're always offering you advice.
Neil Cavuto: Would you accept dietary advice from me? Then why should we get the French offering us advice on our economy?
Gregg Hymowitz: We're alone in Iraq spending $5 billion and until you understand that we live in a global economy and that we all need each other, if it's going to be arrogant that we're going to do it ourselves, we have the $5 billion tab and it's our guys dying by themselves.
Joe Piscopo: You have to differentiate between the government and its people. Even as Americans, we don't always agree with our government. What we have to do now is lock down our borders. Start manufacturing in our inner cities and have Nike build shoes in Camden, New Jersey.
Jim Rogers: Joe, you're an entertainer. You're saying the Beatles should not have come here? You're saying sports people should not come here?
Joe Piscopo: I could live without the Beatles. (laughter)
Neil Cavuto: Let's bring Ben Stein in here. John Gibson has a good chapter in his book about Germany and how Gerard Schroeder was shrewd enough to realize the economy was tanking so that this was his trump issue to rail against America and Iraq. And it worked.
Ben Stein: I don't think it has anything to do with investments. This just has nothing to do with the stock market. Jim, I don't see how one currency can be better than the other. Over certain periods of time some go up and some go down. Our currency has been very good. We're turning in incredible profits this profits season. And that is what's going to power this market higher.
Cheri Jacobus: Obviously the people in other governments are jealous of us and our markets. They're jealous of our culture and our ingenuity and I think we need to take it somewhat seriously, but I don't think we need to worry about it too much. For example, when we went to the United Nations and we needed help with the war in Iraq, look at those countries that refused to vote for the resolution. Yet when the American people coughed up the $86 billion to rebuild Iraq, look at the countries that were first in line to bid on those contracts. They won't give us a hand, but yet they want a handout.
John Gibson: We are accused of arrogance by the French and by the Germans. Imagine you are the president, and you thought there was a threat, and you wanted to defend this country and the French told you no. Who's arrogant Gregg?
Gregg Hymowitz: Maybe they're right. We did go into to Iraq by ourselves and that's why they think we're arrogant.
Jim Rogers: We are borrowing $500 million a year from the rest of the world.
John Gibson: And they are loaning it to us because they know that we pay it back in an instant.
Ben Stein: Jim they want to lend us the money because we're the most politically stable country and they know they'll get it back.
More for Your Money: Patriot Act Profits
Neil Cavuto: President Bush pushing Congress to make the Patriot Act (search) permanent before it expires next year. Charles Payne says not only does the Patriot Act protect your life, it could also help you get more for your money.
Charles Payne: That's right. The economy and the stock market really can't prosper without the safety and support of the Patriot Act. We had a very porous financial economy here with all kinds of Russian mob money. All that has been shut down now. And all this talk about privacy issues like people being able to access your library card. I don't mind if the government sees my library card if the guy after me checked out a book on how to make bombs out of household materials.
Jim Rogers: But a lot of people are now afraid to invest in America because of the things you're now talking about.
John Gibson: The Europeans are now using their own version of a Patriot Act on steroids to round up everybody. They attacked us for what Attorney General John Ashcroft wanted to do, but now they're spying on people and listening to every phone call and interrogating them.
Jim Rogers: I don't live in France or Germany. I live in America and I care about what goes on in America.
Ben Stein: Jim said in the first segment that foreigners were pouring money into this market. I'm not sure what happened to him in the second segment. The Patriot Act only extends to terrorism. I used to be a lawyer at the Federal Trade Commission. We had some of those powers to deal with false advertising. Seems to me that's a minimum invasion of our privacy. But once again, whether it has anything to do with the stock market I have no idea.
Gregg Hymowitz: Unfortunately, I agree with Ben again. I think there's such an emphasis on the Patriot Act because of the chilling effect it can have on our freedoms. Now to the extent that that can gravitate to the financial arena? That's a stretch.
Head to Head
Neil Cavuto: Should those suspected terrorists held at Guantanamo Bay be released? Or would that put your life and bottom line in danger?
Alexander Pires: These folks are all citizens of other countries. We've taken them from mostly Afghanistan and we've put them on this island. We're saying they're not prisoners of war, so they're not under the Geneva Convention. They're in no man's land and that's not very American.
Neil Cavuto: But we have called them combatants. There's a distinction. We've released 146 of them. There are 595 remaining. We must have good reason to keep those five hundred and ninety five.
Alexander Pires: I hope so. They're in solitary confinement 23 hours a day. They don't have lawyers. We're hoping that those who have done wrong are going to be punished. But what about those who are innocent. This is a country that thrives on due process. If these guys are prisoners of war, let them go under Geneva. If they're not, let's get them lawyers and let's get them a quick trial.
Neil Cavuto: One of the arguments you make is that they haven't done any harm to U.S. soldiers or U.S. interests. The same could've been said of Mohammad Atta though, right?
Alexander Pires: This case is now before the Supreme Court. In the end, they always make the final decision. I'm confident that they'll say either these people are prisoners of war or they're entitled to counsel.
Neil Cavuto: Would you at least argue that if in doubt, then don't let them out? If 9/11 taught us anything it's that some people's rights may get trampled on. And there have been a couple of cases where that is indeed the case. If it means keeping the greater population safe, so be it.
Alexander Pires: We've got to treat citizens of Great Britain and Australia the way we'd want to be treated. We have a million lawyers in the country. To give them counsel, that's fair and just.
FOX on the Spot
Ben Stein: Summer Shocker! Saudi unrest pumps up gas prices. Average gas could hit $2.50/gallon.
Charles Payne: Buy Tiffany! (TIF) "Little blue box" = big green! Improving job market will help high-end retailers. I do not own it.
Joe Piscopo: Inner city real estate gives back big bling bling. Time to start redevelopment of the inner cities.
Jim Rogers: No more bull in China & commodities. There's a consolidation coming and I wouldn't buy either of them now.
Gregg Hymowitz: Don't worry! No rate hike 'til 2005! And that will help stocks in 2004.
Neil Cavuto: Earnings will trump higher rates and lead to a much higher market.
Forbes on Fox
How are politics and global events affecting your wallet? We’ll put the story In Focus and give you the bottom line.
David Asman: Some of our partners in Iraq are packing up and getting out. Will weak allies over there hurt our economy over here? Let's check the “Coward Scorecard,” as we're calling it. Spain obliged al Qaeda by deciding to ditch Iraq after the terror blast in Madrid. Honduras and the Dominican Republic did not take long to follow. Could this hurt our economy?
Jim Michaels, editorial vice president: I hate to use an emotional term, but we've been betrayed by the Spaniards. They have paid blackmail to al Qaeda. They said ‘you stop bombing us, we'll take our troops out.’ They made a tacit deal. When you pay blackmail to criminals, you're strengthening their cause. You're giving them confidence. And the consequences of this is going to be a lot of innocent civilians are going to die in suicide bombings because the Spaniards have told the al Qaeda people that it pays you to use terror against civilians.
David Asman: Is this going to hurt us?
Bruce Upbin, senior editor: Don't blame Spain for opting out of an ill-chosen and ill-conceived war. The only thing this reflects badly on is President Bush's very losing powers of persuasion in diplomacy. And to think that it has ties to our economy is nuts. The last few quarters have been great. All the news from corporate America is great despite the escalating violence in Iraq.
David Asman: Quentin, bin Laden himself praised the Spaniards for doing what he wanted to do. Should we blame the Spaniards?
Quentin Hardy, Silicon Valley bureau chief: Well, Jim is sort of down on democracy. The Spaniards had an election. And they voted for the group that wanted to get the soldiers out. We do have to support democracy. This is a war of ideas. Sorry, Jim. Now, the coalition of the willing turns out to be a bunch of public relations spin from the Bush administration? I'm not too surprised. 1 percent of the troops are Spaniard. The Hondurans are a rounding error and we think this is a massive defeat? Please.
David Asman: Some of those people were actually dying for the cause of freedom in Iraq.
Elizabeth MacDonald, senior editor: Sure, sure. But the issue is if jihad terrorists take over Iraq as they're poised to do and this collapses into a civil war, it would absolutely hurt not only the stock market, but our economy and Bush's chances for re-election.
David Asman: So Rich, is this going to hurt the economy and Bush?
Rich Karlgaard, publisher: No. I'm sympathetically with Jim. But this is not going to hurt the economy. In fact, the global economy is going to grow at 3.6 percent this year, and that means our chicken friends in Europe are going to start concentrating on their own opportunities rather than knocking us down a peg.
Bob Lenzner, national editor: That's a really good point. We're expanding faster than Europe. We have low interest rates. We have the tax cuts. And we have a lower dollar. The economy is actually growing at over 5 percent right now. 1,200 Spaniards leaving Iraq will not destroy our progress.
Jim Michaels: You tell the marines in front of Fallujah that our economy is strong. The fact is the Spanish voters have handed a victory to al Qaeda and said that terrorism pays, and we're going to pay for this.
Elizabeth MacDonald: Hang on a second. There has been an uptick in chatter recently that terrorists may attack here. The fear is that there will be a suicide bomber here in the U.S., and it will hurt us. The issue is can we shoot our way into democracy in Iraq? That's always been a problem with the situation in Iraq. But let’s face it. It will not turn into Kansas overnight. Look how long it took to get our democracy straightened out. Women got the vote in 1920 after Iceland and Denmark. It took decades.
Quentin Hardy: Maybe the problem is that there was no relationship between Iraq and al Qaeda until George Bush unilaterally invaded Iraq. Meantime, back in the world, the Europeans we hate, with the help of the FBI and Sweden, are rescuing al Qaeda members.
Jim Michaels: How can you believe this when these terrorists are flooding into Iraq across every border to join in the crusade against the Americans? Look, you don't like the war. You don't like President Bush. That's your privilege. But we're in this war. And what the Spaniards have done is not going to hurt us militarily, but it strengthens al Qaeda. And that's a defeat. And that's a defeat for the United States.
Quentin Hardy: Jim, I say it because you are wrong. There was no relationship between Saddam and al Qaeda. Bush pushed Saddam out of the way. He is reaping the whirlwind. He said ‘the terrorists are coming there, bring 'em on.’ He’s got them. He did it. The Spaniards don’t like it. They’re pulling out. It's their prerogative. It is a democracy.
Elizabeth MacDonald: Whether you agree with the President’s decision to go into Iraq, I am happy that Saddam Hussein and his psychopathic sons are out of the way because they would have been a nightmare to deal with. But they are killing children right now. We're talking about terrorism right now, not Saddam Hussein. We're talking about terrorism.
Bruce Upbin: We can take care of this ourselves. We have the manpower and don't need the Spaniards or anybody else. The problem was doing it in the first place is the issue.
Rich Karlgaard: We're rehashing an old argument. I don't think this hurts the economy. And this does not hurt Bush. He has had one of the worst months in his history as president and yet he is pulling away from John Kerry in the polls.
Elizabeth MacDonald: But what I'm saying is, there is increased chatter that a suicide bombing could take place in the United States and if this thing collapses into a civil war it will hurt Bush. This election is about Iraq and the national insolvency issue this country is facing.
Jim Michaels: Let's go back to Quentin. Do you really believe that if we hadn't attacked Iraq, these suicide bombers would stop attacking the United States?
Quentin Hardy: I believe in giving up on the U.N., Bush didn't stay the course. It would have collapsed under its own weight and would have been a very effective end to the regime. There were no weapons of mass destruction. It is clear now that country was falling apart under its own hook and we would be in a better position today.
Tired of hearing the same investing advice from every side? We’ll give you the contrarian approach to investing in our Flipside segment.
David Asman: Inflation is coming and thank goodness! Inflation is good for the stock market. I never thought I would say that. Elizabeth, how is inflation good?
Elizabeth MacDonald: Well, so long as we don't see runaway double-digit inflation that we saw in the 1970's, if companies can hike their prices, that fuels profits. We saw it in the first quarter. Revenues are up 13 percent for 248 companies in the S&P 500. If they can hike it just a little bit, earnings look better.
Jim Michaels: Inflation always feels good in the beginning. You can raise prices; your house is worth more. But in the long run inflation kills stocks. You cannot control it. It is self-feeding. It goes to 3 percent to 4 percent to 6 percent, and then you have to use drastic methods to cure it as we did in the 1980's. Inflation is very bad for stocks and the economy.
David Asman: It has been pointed out that one thing causes inflation is spending too much by the government. And they've been doing a lot of that.
Quentin Hardy: They talk about increasing the money supply by 2 percent, a gradual inflation that's good for growth. And look at Nucor Steel (NUE) on Thursday, a great little steel company. They were able to pass on higher prices. That's a little bit more inflation but it also meant higher profits for them.
Jim Michaels: Because of the steel tariffs, it has nothing to do with inflation.
David Asman: Mike, you say there is no inflation.
Mike Ozanian: John Kerry has his own misery index; Mike Ozanian has his own inflation index. Mine is when the price of gold goes up faster than my cable bill. Gold is actually down 5 percent this year. I don't see inflation anywhere. The long-term Treasury bond yield is like 5.2 percent. I don't see inflation anywhere. I think that earnings mean more in a non-inflationary economy.
David Asman: When I put gas in my tank I see inflation.
Bob Lenzner: The big profits that are driving up the stock market are coming from the ability of manufacturers who have raised their prices 8 percent on an annual rate this year so far. Agricultural prices are going up 23 percent. So he's wrong. The reason why gold is down -- gold is down because it was a deflation play. The commodities are moving up.
Jim Michaels: Bob, those first couple of drinks always make you feel good. But boy, lookout for the hangover the next day, and that's what inflation is.
Elizabeth MacDonald: David, you're right to bring up gas prices, because we have been living with inflation in certain areas including gas prices and health care costs and college tuition costs. But what we're talking about is the inflation rate ticking up in March, and that's because of hotel costs and other retail costs. Seasonal, meaning the winter months.
Mike Ozanian: I might be wrong Bob, but if I am, all of Wall Street is wrong, because Treasury bond yield at 5.2 percent is not an inflationary interest rate.
Bob Lenzner: But it will not be there that long. It will move up. Nobody knows exactly how much.
Elizabeth MacDonald: But is it good for earnings and the market?
Bob Lenzner: Right now it is.
David Asman: You say it's good for the market. If it is good for the market, which company, specifically, is it good for? What should people be buying knowing that inflation is going up?
David Asman: Quentin, do you see signs of inflation? What should people be buying as a hedge against it?
Quentin Hardy: I thought Motorola (MOT) did well. Tech guys can pass along their prices. But Greenspan this week is signaling he will raise interest rates. And he also said it's a better environment for profits.
Mike Ozanian: If Greenspan raises short-term rates that will probably bring long-term rates down, because Wall Street will not have the fear of inflation. That would be a good thing.
Elizabeth MacDonald: Greenspan will not raise interest rates because he doesn't want to be blamed as he was in 1992 when he was too cautious on keeping rates in check.
Makers & Breakers
• Pactiv (PTV)
Sandy Lincoln, president and CEO of Wayne Hummer Asset Management: MAKER
Their lead product is the Hefty bag. About 70 percent of their business comes from the consumer packaging and food service industries as well. They are a known acquirer, that's how they built this business.
David Asman: They buy up a lot of other companies. And they are at $22 (Friday’s close: $23.03.) They can go to what?
Sandy Lincoln: $25-26
Bill Baldwin, editor: BREAKER
Pactiv is a leader in those little trays that go under chicken parts in the supermarket and an innovator in trash bags. I think of these chicken parts, trash, as commodities. I think they are both yucky. I don't like this one at all.
Jim Michaels, editorial vice president: BREAKER
You probably aren't old enough to remember when you had to take garbage out wrapped up in newspapers and it made a mess. Those plastic garbage bags are one of the greatest inventions ever made. However, you're right, it’s a commodity product. And the stock sells at a low, below market PE and should sell there. I wouldn't buy it.
David Asman: I like the stock. What do you say to these guys?
Sandy Lincoln: It is a commodity. You're right. The way you go about a fragmented business is to acquire your way into it. That’s how they’re getting their growth. They’re going to keep doing it. They’re a proven acquirer. You guys are dead wrong.
• Zebra Technologies (ZBRA)
Sandy Lincoln: MAKER
They make bar code technologies. You see it everywhere you check out. But they have made applications of that in a lot of other markets and also waiting in the wings with radio frequency ID tags and labeling. That's the way the future is headed. And they are there as well.
David Asman: Zebra is at 75 (Friday’s close: $74.11.) How high do you think it will go?
Sandy Lincoln: Could get into the low 80s.
Jim Michaels: BREAKER
It's in a great business but it has competition. The technology changes quite rapidly in this business. All the good news is in the price of the stock. I wouldn't buy it for a five or six point profit.
Bill Baldwin: MAKER
I think they will put bar codes and radio tags on everything. They will put them on pills and even babies if they have to. I think that this is really a growth industry. I want to own that one.
Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Why you should buy the companies that are screwing you?
Bill Baldwin: If you are upset about gas prices, buy 100 shares of ExxonMobil (XOM). It pays a nice dividend and helps cover fuel bills. Another one to think about is Merck (MRK), a very good drug company. And the drugs cost a lot of money. Before you go into retirement stock up on Merck shares.
Lea Goldman: I don’t love Merck. There are plenty other drug companies that are screwing just fine like Pfizer (PFE). But Merck has a pipeline problem. They are about to lose the patent on Zocor in 2006. All their other drugs are in the early stages of development.
David Asman: Bruce, what about those companies that love to nickel and dime you to death? They are the ones you say you should own?
Bruce Upbin: Everybody hates the cable guy. They made Lea wait four hours this morning. You negotiate for a $50 a month bill, but it comes out to be $75 every month. I say buy them. I own Comcast (CMCSA), but Cox Communications (COX) is even better. These stocks have under performed the Dow for the last six months. You can also buy Cablevision (CVC).
David Asman: And on cell phones, they are loading you up with more surcharges and expenses.
Lea Goldman: That’s why your $29.99 a month cell phone plan ends up being twice as much at the end of the month, because of these inexplicable surcharges. They preserve margins in the event of very competitive pricing plans between all the cell phone companies.
Lea Goldman: All of them.
David Asman: You all think cell phones are good or bad?
Bruce Upbin: I’m not too keen on Sprint. They have the wireline business and long distance prices are collapsing.
David Asman: Mike, refinancing, the interest rates are so low. You would be dumb not to refinance. But what happens when you do?
Mike Ozanian: Fees upon fees. Fees to title search, fees for if you are in a flood zone. I want to get some of my money back. I like Washington Mutual (WM). They are the country’s largest mortgage banker. A cheap stock at about $41 a share with rich dividend yield at 4.2 percent.
David Asman: What do you think about refinancing charges?
Bill Baldwin: I'll buy that but I have another concept. The company you just love to hate. You might have noticed that the health insurers and HMO’s that do the best job of losing, screwing up and delaying your payments are the ones that are sought after by employers because they don't have to pay as much. I would never criticize something like UnitedHealth (UNH) for their claims paying, but the stock is really good.
Lea Goldman: I feel like these guys are very controversial and under attack and their pricing reflects that.
Bruce Upbin: They don't know which way they're going right now. Their accounting is often under question. Every five years it's a scandal.
StockSmarts: Bush Book War$
The election war is being fought on the bestseller list with critics of President Bush jockeying for a top spot. These books may or may not influence the election, but will they influence the stock market?
Stuart Varney of Fox Business News says the books are having an unintended positive influence on both the president and the market. He points out that while Democrats have thrown everything at the president this month, he’s actually risen in the polls. He says the market wants President Bush to win a second term; it does not want John Kerry to become president.
Mark Green, president of the New Democracy Project and the co-author of “The Book On Bush: How George W. (Mis)leads America” says the book wars will only help the market, especially if they help get John Kerry elected. He believes Kerry would be better for the economy and the market.
Jonathan Hoenig of Capitalistpig Asset Management says interest rates will have a bigger impact on the market right now than anything being sold at Barnes & Noble. Fear of rising rates is keeping Jonathan out of most stocks right now. He’s betting heavily on floating rate funds that he says should benefit from rising rates.
Wayne Rogers of Wayne Rogers & Co. agrees with Jonathan that interest rates trump the book wars in terms of what the market is watching right now. That said, he read a quote from Bob Woodward’s book “Plan of Attack” that Wayne says answers those critics of President Bush who call the war in Iraq “Bush’s war” and shows that what President Bush did in Iraq was carry out the wishes of Bill Clinton and Congress during the Clinton administration:
"A 1998 law passed by Congress and signed by President Bill Clinton authorized up to $97 million in military assistance to Iraqi opposition forces 'to remove the regime headed by Saddam Hussein' and 'promote the emergence of a democratic government."
Bob Woodward, “Plan of Attack”
Dagen McDowell of Fox Business News says the economy is going well and there has been an increase in jobs, and she says those statistics mean more to the market than any criticism leveled at the president from the recent spate of anti-Bush books.
Tom Adkins of CommonConservative.com says the recent books bashing the president are designed to influence the election and will have a slight impact on confidence and the market, but not enough to make a difference long term.
Best Bet$: Campaign Winner$
This might be the nastiest presidential campaign ever. And as the White House contenders take shots at each other, which stocks could benefit?
Jonas says Tribune (TRB)
Friday's close (4-23-04): $48.68
Jonas says a nasty presidential race is great for the media because it gets people to really focus on the news. He says Tribune, which owns a major newspaper in the three largest markets as well as a television station, will benefit from that. Wayne agrees. Jonathan says he wouldn’t bet against this stock – he points out that Tribune also owns the Chicago Cubs – but he says he wouldn’t buy it either.
Wayne says Viacom (VIA.B)
Friday's close (4-23-04): $40.55
Like Jonas, Wayne believes the media stocks will benefit from all the election rancor. He thinks Viacom is a good way to play that trend. He owns shares in the company. Jonathan says the chart on this stock doesn’t interest him. Jonas says if you want to make money on a theme like this, you have to buy early -- before the chart looks strong -- and he says Viacom is a good call.
Jonathan says Nuveen Floating Income Rate Fund (JFR)
Friday's close (4-23-04): $15.19
Jonathan says all the criticism leveled at President Bush during this campaign will force the president to move a little more left and spend a lot of money which will drive up debt and ultimately force interest rates higher. He’s still betting on floating rate funds and JFR is a favorite. Jonas doesn’t like this pick. Wayne says this pick is, "a bore."
Stock of the Week
Last week’s pick was Coach (COH) made by Lori Wachs. For the week of April 16-23, it was UP 10.4 percent.
This week, Tom Adkins says that Accredited Home Lenders (LEND) is the stock to watch. He says the sub prime mortgage lender will surprise Wall Street with great earnings this week and the stock will pop. Dagen disagrees. She says as the economy recovers, rates rise, and this company will suffer because more than half of its revenue comes from refinancing which will slow as rates climb. Jonathan says rates are on the rise, and he agrees with Dagen that now is not the time to buy a stock that thrives in a low-interest rate environment like LEND does.
Cashin’ In Challenge
For an update of who has the lead in the 2004 Cashin’ In Challenge, check out the Web site at: www.foxnews.com/challenge
Wayne, Jonathan and Jonas answered some of your questions.
Question: “Domino’s Pizza has filed to go public. Would you buy the stock?”
Jonathan says other Pizza stocks have not impressed him, and he wouldn’t jump into this one either. Jonas says you will not make a lot of money on this type of IPO. He wouldn’t buy it. Wayne agrees with Jonathan and Jonas.
Question: “Can Vimpel Communications (VIP) climb even higher?”
Wayne says he got stopped out of the stock a while ago – he recommended it in December 2002 as the stock to own in 2003 (it rose 129 percent that year). But he says if Vimpel builds a new base, he’ll get back into the stock. He still likes the company and the Russian telecom sector as a whole. Jonas says Russia’s very rural, and it could be problematic spreading this company’s cell service across the country, but he likes the company and is a partner in a firm that owns a big position in this stock.
Question: “What’s your opinion on Genzyme (GENZ)?”
Jonas says he’s been a little early saying this sector is overpriced, but he still thinks it is, and even though he considers Genzyme one of the safest stocks in the sector, he says he would buy a fund instead of a single stock to limit the risk when investing in biotech. Jonathan says wait for more strength in Genzyme before buying it. He’d buy it at $50 or $55, but not in the mid to low $40s. Wayne says it’s not his favorite stock in the sector. He wouldn’t buy it.